Frequently Asked Questions
about Mortgages & Hard Money Loans
Welcome to MVF's Frequently Asked Questions (FAQ) page. While nearly every real estate loan we have helped fund since 1985 has been unique, as no two borrowers are identical and every property will have its own unique attributes, we have compiled a list of the most common questions our team receives along with the most likely answer. While we are fairly certain you're looking for an answer that goes beyond "It Depends", and we've done our best to avoid using this catchall phrase, do keep in mind that a quick, no-obligation consultation with one of our seasoned loan officers will always be the best source for accurate and applicable information. Plus, you'll gain access to the 300+ years of collective experience that have guided thousands of borrowers to the benefits of being a property owner in California.
General Real Estate Loan Questions:
What Type of Real Estate Loans Do You Offer?
The simple answer is that we offer all types of first and second mortgages for residential and commercial properties. Whether you are a first-time home buyer, business owner, seasoned investor, ag business, or a property owner looking to use your equity, we can help. We also offer what some may call second-chance loans, for those with credit challenges, so even if you've filed for bankruptcy we have a program to help. As a direct lender, we also provide short-term (less than 36 months) private money mortgages, also known as hard money loans, that typically provide a fast funding solution when a national or local bank won't accept the risk. Use the following link to explore our most common real estate loan options or submit this simple form to have a seasoned loan officer review your loan scenario, one of Mid Valley Financial's experienced loan officers will contact you within a business day and guide you to the best mortgage solution.
How Much Do I Need For A Down Payment?
Down payment requirements depend on the type of loan you get. We can offer home loans with as little as 0% down. Some sellers can carry paper to help finance a down payment resulting in an even lower down payment. The VA loan is a true 100% loan to value, which means the seller can pay the closing costs and there is no money out of pocket.
How Long Does Approval Take?
Approval times vary based on your loan application's complexity. Typically, we can pre-qualify a borrower within minutes. However, obtaining a pre-approval, which is a lending commitment, usually takes one to two business days for complete underwriting approval.
Being a prepared buyer can save you time and make you a preferred client for realtors. It also helps you understand your affordability. You can get started by completing our secure Online Loan Application. If you prefer paper, download a residential or commercial loan application. Once complete, you can use our secure drop box, visit us in person, or fax it to (559) 432-8298. If you'd prefer to email your application and supporting documents, please call (559) 432-8221 and request a secure folder to share your personal information.
What Are Closing Costs?
Closing costs are fees charged to cover appraisals, title searches, document preparation, recording fees, flood certification, and so forth. They can be included in the loan amount for some transactions resulting in zero out-of-pocket costs.
What Is The Best Type Of Loan For Me?
Choosing the right loan depends on many aspects. For instance, how long you plan to keep the property; how much of a down payment you can afford; how much of a monthly payment you can afford; what future earnings look like and so forth. Start by getting pre-qualified to find out what is available to you by filling out our Online Pre-Qualification Form.
What If I Have Had Credit Problems In The Past?
Mid Valley Financial works with many lenders and can obtain financing for virtually anyone regardless of their past credit problems. Simply fill out the Online Pre-Qualification Form to get started!
I’ve Only Been Late On A Couple Of My Credit Card Bills. Does This Mean I Will Have To Pay An Extremely High-Interest Rate?
Not necessarily. If you have been late less than three times in the past year, and the payments were no more than 30 days late, you probably have a reasonable chance of getting a home loan at a competitive interest rate. If the late payments were 60+ days late and cannot be explained, you may have to settle for a higher interest rate. Contact us for further information.
When Should I Apply For My Loan?
Today! Then you can get pre-qualified which means you’ll know what is available to you before going shopping for your new home. This will also allow you to know the mortgage you can afford in advance. Just fill out our Online Pre-Qualification Form!
Why Should I Be Pre-Qualified?
By pre-qualifying, you know what price range is in your budget for a home mortgage. This ultimately puts you ahead of the game! Start by filling out our Online Pre-Qualification Form today!
What Is Private Mortgage Insurance (PMI)?
In the event that you do not have a 20% down payment, lenders will allow a smaller down payment – as low as 0% in some cases. With the smaller down payment loans, however, borrowers are usually required to carry private mortgage insurance. Private mortgage insurance will usually require an initial premium payment and may require an additional monthly fee depending on your loan’s structure. Learn more about financial terms here.
What Are Points?
There are two types of points: Discount and Origination. Discount points are charged for the purpose of obtaining a lower rate. Origination points are a fee charged by the lender for doing the loan. A point is equal to 1% of the loan amount. Learn more about financial terms here.
Hard Money (Private Money) Loan FAQ's
What is a Hard Money Loan?
A hard money loan, also referred to as a private money loan, is a short-term, asset-based loan primarily used in real estate investing. Unlike traditional bank loans, hard money loans are funded by private investors or direct lenders like Mid Valley Financial. These fast-funding loans are typically based on the value of the property being used as collateral rather than a borrower's credit history and they can solve many of the challenges a borrower would encounter when dealing with the stricter underwriting criteria of a national or local bank. Learn More about MVF's Hard Money Loan Options.
What Are the Benefits of Choosing Mid Valley Financial for a Hard Money Loan?
MVF offers several advantages, including fast approval and funding, flexible loan terms, competitive interest rates, and a simplified application process. We specialize in helping real estate investors secure the financing they need quickly and efficiently. Submit a Loan Scenario for a No-Obligation Evaluation.
What Types of Properties Can I Use as Collateral for a Hard Money Loan?
We can use a wide range of property types as collateral, including residential, commercial, land, and other investment properties. We understand that real estate investments come in various forms, and we are here to help you finance your project, regardless of the property type. Explore the Typical Property Types.
How Does the Approval Process Work with MVLoans?
Our approval process is designed for speed and efficiency. After you submit your loan application and property details, we'll assess the property's value and your future plans to see if it is a good fit for our portfolio. Since we focus on the property's potential and not just a credit score or a property's current condition, we can say yes when other lenders say no and you can expect funding in as little as 10 business days. Start Your No-Obligation Loan Evaluation.
What are the Typical Hard Money Loan Terms with Mid Valley Finacial?
MVF offers short-term loan options, typically ranging from 6 months to 2 years. However, loan terms can be customized to fit your specific needs and project timelines. We'll work closely with you to create a repayment plan and exit strategy that will align with your current and future goals. Learn More About Our Loan Terms.
Mortgage Rates Are At Favorable Levels. Is It Time For Me To Refinance?
When interest rates fall, a homeowner should definitely call Mid Valley Financial Services about refinancing! Start by discussing your entire financial situation and your goals. Once the goal is determined, contact Mid Valley Financial and we will provide a couple of refinancing scenarios for you. Each will show how your loan term length, monthly payment, and your total interest expense on the loan will change. After looking at these scenarios, it will be clear whether or not you should spend the money to refinance. Learn more about refinancing here.
How Do I Know When I Should Refinance My Current Mortgage Loan?
It is often said that you should refinance when mortgage rates are 2% lower than the rate you currently have on your loan. Refinancing may be a viable option even if the interest rate difference is less than 2%. A modest reduction in the loan rate can still trim your monthly payment. For example, the monthly payment (excluding taxes and insurance) would be about $770 on a $100,000 loan at 8.5%. If the rate were lowered to 7.5%, the monthly payment would be about $700, a savings of $70. The significance of such savings in any scenario will depend on your income, budget, loan amount, and the change in interest rate. Get started by contacting a Mid Valley Financial loan officer today!
Should I Try To Pay As Many Discount Points As Possible To Lower My Loan’s Interest Rate?
If you plan on staying on the property for at least a few years, paying discount points to lower the loan’s interest rate can be an excellent way to lower your required monthly loan payment (and possibly increase the loan amount that you can afford to borrow). However, if you only plan to stay on the property for a year or two, your monthly savings may not be enough to recoup the cost of the discount points that you paid up-front. Contact us to see how long it would take for your monthly savings to recoup the costs of the discount points.
What Does It Mean To Lock The Interest Rate On A Mortgage Loan?
Due to the nature of interest rate movement, mortgage rates can change dramatically from the day you apply for a mortgage loan to the day you close the transaction. If interest rates rise sharply during the application process, it could make a borrower’s mortgage payment larger than he/she previously thought. To protect against this uncertainty, a lender can allow the borrower to ‘lock-in’ the loan’s interest rate, guaranteeing the borrower the prevailing loan rate for a specified period of time (often 30-60 days). Call us for details and pricing on this service.
Should I Lock-In My Loan Rate When Applying For A Mortgage Loan?
No one knows for sure how interest rates will move at any given time but we may be able to give you an estimate of where mortgage rates could be headed. If interest rates are expected to be volatile in the near future, you may want to consider locking your interest rate if rising rates will no longer allow you to qualify for the loan. If your budget can handle a higher loan payment, you might want to consider allowing the interest rate to ‘float’ until the loan closing. Find a loan officer to assist with your interest rate today!
Adjustable Rate Mortgages (ARM)
When Interest Rates Are Low, Should I Consider An Adjustable Rate Mortgage (ARM) Loan?
One of the advantages of Adjustable Rate Mortgage (ARM) loans is that they can have lower interest rates (during the first couple of years) than a fixed-rate loan program. Even when fixed interest rates are low, the starting rate on ARM loans is still lower. Of course, this lower rate may be only temporary, depending on future interest rate movements. One of the questions that you need to ask yourself is: How long do you think you will live on the property? If you plan on moving in a couple of years, ARM loans can save you interest costs without exposing you to much risk of future payment changes.
I Only Plan To Live In My House A Few Years. Is An ARM Loan A Good Option For Me?
Many people choose the traditional 30-year fixed-rate mortgage loan because they want payment stability. If you only plan to stay in the home for a couple of years, you may not want to pay for the extra stability that you are not using. Instead, you may want to consider getting some type of Adjustable Rate Mortgage (ARM) loan. They offer lower starting interest rates than the 30-year fixed-rate loan. Some ARM programs will start with interest rates as low as 1% but the interest rate will be subject to change every month. The one-year ARM loan will usually have a starting interest rate of 1-2% below the prevailing 30-year fixed rate and will be subject to change every year. Contact us today to learn more.
If I’m Not Sure How Long I Plan To Stay On The Property, Should I Still Consider An ARM Loan?
There are several types of ARM loans available with different levels of ‘payment-change’ risk. You can choose a loan with an interest rate that adjusts every six months or a year. These loans usually have the most attractive introductory rates. There are also loans that will offer a fixed interest rate for three, five, seven, or even 10 years before turning into one-year adjustable rate loans. These loans offer some payment stability and a lower rate than what could be obtained with a fixed-rate loan. But remember, loans with fewer rate adjustments usually charge a higher introductory rate. Call us for more information.
If I Get An Adjustable Rate Mortgage Loan, How Does My Lender Determine What The Rate Will Be From Year to Year?
Although your interest rate can be subject to change, Mid Valley Financial will calculate the interest rate at each adjustment period by adding its margin (an interest rate that is specified when you get the loan) to an established monetary index. The margin will vary and you should give us a call for more detailed information.
What Indexes Are Used to Calculate ARM Loan Rates?
A variety of adjustable rate programs are available that use different indexes. Contact us for details today for the most recent information.
Aren’t There Just Two Kinds Of Mortgages: Fixed And Adjustable Rate?
You could say that. All mortgages do fall into one of these two categories: either the interest rate you pay is the same (fixed) for the life of the mortgage, or it can change (adjust) over the life of the mortgage. Learn more financial terms here.
What Is A Fixed-Rate Mortgage?
With this type of mortgage, your monthly payments for interest and principal never change. Property taxes and homeowners insurance may increase, but generally, your monthly payments will be very stable. Fixed-rate mortgages are available for 50 years, 40 years, 30 years, 20 years, 15 years and even 10 years. There are also ‘bi-weekly’ mortgages, which shorten the loan by calling for half the monthly payment every two weeks. Since there are 52 weeks in a year, you make 26 payments, or 13 months worth, every year. Learn more by contacting us today!
How Do I Know Which Type Of Mortgage Is Best For Me?
There isn’t a single, simple answer to this question. The right type of mortgage for you depends on many different factors: Your current financial standing, how long you intend to keep your house, and so forth. For example, a 15-year fixed-rate mortgage can save you many thousands of dollars in interest payments over the life of the loan, but your monthly payments will be higher. With an adjustable-rate mortgage, you may start with a lower monthly mortgage than a fixed-rate mortgage, but your payments could get higher when the interest rate changes. The best way to find the right answer is to contact Mid Valley Financial.
How Much Will My Credit History Affect My Ability To Get A Mortgage?
This is a common worry for many home buyers. Most don’t need to worry about the effects of their credit history. As a security measure, it’s best to get a free copy of your credit report to review before you apply for your mortgage. That way if there are any errors you can take steps to correct them before you submit your application. If you have had credit problems, be prepared to discuss them honestly with your loan officer, as well, you should be ready to provide a written explanation of the circumstances. We know that there can be legitimate reasons for credit problems, such as unemployment, illness or other financial difficulties. If you've had a problem corrected, and your payments have been on time for a year or more, your credit will probably be considered satisfactory.